The idea of overhauling the traditional Medicare plan design in ways that could kneecap the Medicare supplement (Medigap) market kept coming up today during a House Energy & Commerce health subcommittee hearing on Medicare physician pay reform.

The subcommittee organized the hearing to look at ways to solve the Medicare physician pay “sustainable growth rate” (SGR) problem. Years ago, members of an early Congress tried to rein in Medicare spending by holding increases in Medicare physician pay to the growth rate of U.S. gross domestic product (GDP). Since then, physician pay has increased much faster than GDP, and Congress has never had the heart to make an SGR-related adjustment stick.

Last year, Democrats and Republicans agreed on the need for an SGR fix, but they never could agree on how to pay for a fix.

Earlier congressional and Obama administration efforts to hold down federal spending on Medicare Advantage plans — private plans that serve as a replacement for traditional Medicare plan coverage — have slowed or possibly reversed Medicare Advantage growth. UnitedHealth Group Inc. (NYSE:UNH) reported Wednesday, for example, that its Medicare Advantage enrollment in the third quarter of 2014 was about the same as it was a year earlier.

Sales of Medigap plans — private insurance policies designed to fill in the many complicated gaps in traditional Medicare Part A hospitalization coverage and Medicare Part B physician services coverage — have looked better. UnitedHealth’s Medigap sales grew 8.5 percent year over year.

But Medigap plans — and the traditional Medicare plan design quirks that led to the creation of Medigap plans — face formidable opposition.

How Washington handles Medicare changes could be relevant to the major medical community, because many of the features of the Patient Protection and Affordable Care Act (PPACA) exchange system are based partly on the government’s experience with the Medicare Advantage and Medigap markets.

The outcome could also be relevant to the long-term care (LTC) planning, because of Medicare’s role in paying for home care, and because of possible interactions of Medicare program changes with proposals to have traditional Medicare or Medigap policies pay for nursing home care.

To learn more about what SGR hearing witnesses were saying today about Medigap, read on.

Babies in diapers

1. Witnesses supported making Medicare enrollees’ skin hurt in a simpler way.

Sen. Joseph Lieberman, a former Democratic and later independent senator from Connecticut, stumped for a proposal he developed earlier with Sen. Tom Coburn, R-Okla., to replace the traditional Medicare program’s intricate array of co-payment, coinsurance and deductible requirements with a $7,500 annual cap on a traditional Medicare enrollee’s out-of-pocket medical expenses.

To keep that cap from leading to an increase in Medicare enrollees getting unnecessary and wasteful care, the Lieberman-Coburn proposal calls for giving the enrollees “more skin in the game” and prohibiting Medigap policies from paying any of the first $550 of an enrollee’s out-of-pocket costs.

Lieberman acknowledged that some say banning “first-dollar cost sharing” would hurt low-income seniors.

Lieberman argued that capping those seniors’ out-of-pocket spending would help those seniors avoid having to pay extra for Medigap coverage.

Lieberman said the Kaiser Family Foundation proposal would lower costs for about 80 percent of Medicare enrollees.

See also: Study Skewers Medigap Plans.

Hospitals

2. Hospitals are open to the idea of imposing a surcharge in Medigap plans with especially low cost-sharing requirements.

Richard Umbdenstock, president of the American Hospital Association (AHA), talked about the proposed ban on first-dollar Medigap coverage. He also talked about President Obama’s proposal to add a 15 percent surcharge to Medicare Part B premiums for new enrollees who buy Medigap coverage that fail to share enough of the health care costs with the patients.

The AHA is open to both proposals, Umbdenstock said.

GAO analysts eye Medigap effects

U.S. Capitol

3. The hearing was light on representation for patients and insurers. 

The only SGR hearing witness who could be called a patient advocate was Eric Schneidewind, president-elect of the AARP. AARP lets insurers offer insurance products to its members through affiliate marketing relationships, and it looks as if AARP was the only organization with a witness at the hearing that has much of a relationship with insurance issuers and distributors.

See also: Ways and Means Goes After AARP.

CORRECTION: Joseph Lieberman’s role was described incorrectly in an earlier version of this article. He was a senator from Connecticut.